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Posts tagged with: paying off car loan

Skating on Thin Ice

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Since I’ve started working full time (and having the steady full-time paychecks that come along with it), I’ve noticed one BIG change in hubs’ and my mentality toward debt payments:  We’re a lot more eager than we used to be.

Now, don’t get me wrong. We’ve always been eager to get out of debt! But what I mean is that we aren’t taking as many precautions and have a little bit dangerously low safety net in place currently.

Prior to landing the full-time job, we had extremely variable income. In hubs’ job, alone, he’s had months where he’s made nothing and months where he’s made nearly $10,000! That’s a huge fluctuation! While my income was always a little bit more stable (in terms of the same amount of money almost every month), it was an adjunct position so there was no stability in terms of long-term job security. I sign a semester-by-semester contract so I only ever have a guarantee for just a few months at a time.

My full time job now fills that void. It offers safety and security. I know that, no matter what, I’ll be getting a paycheck every two weeks for $X amount (of course, this is assuming I fulfill my job duties…I’ve never heard of anyone being fired mid-semester but I presume it could happen if one were to just drop off the face of the Earth or something drastic happened). But you get my point. This steady money provides a bit of a safety net that, otherwise, we had to do ourselves through savings.

So, although I don’t like how thin we’re running on money right now, we’ve been making some much riskier financial decisions than we have in the past.

All of our savings accounts are dangerously low. Under a thousand in our emergency fund. Only a couple hundred in our car repair fund, a couple hundred in our health/dental/vision fund, a couple hundred in our annual expenses fund. All of our savings are grossly under-funded right now. Plus, we’re slipping into a limbo of living on last month’s income. Basically, I still use my full-time paycheck to live on last month’s income, but all of my part-time pay I’ve started using toward the current month to boost up our debt payment figures. Same thing with hubs. He had a no-income month in August and, since then, I’ve been using his pay for the current month simply out of necessity! It’s a slippery slope and I know that we’re sliding a little bit.

I know all of these factors combined (very small EF and other savings, smaller safety net through “last month’s income”) can come back to bite us in the butt. But my thought process is this:

I really want to pay off our car. Like….I really, REALLY want to pay it off.

There are two ways that this could go:

  1. We have a super small safety net until the car is paid off. Then we bulk back up our savings and everything is fine. No big deal.
  2. We have a super small safety net and something happens that requires immediate money and attention (e.g., big car repair, unexpected health issue, etc.). We divert the money we WOULD have put toward car debt toward the new issue. The car isn’t paid off as quickly, but we all survive.

Maybe I’m missing something, but this is how it seems to me. Even if (knock on wood) we suffered some unforeseen financial blow, we have the funds to deal with it…it would just require us to put less toward debt. So it would blow the goal of paying off the car by December, but we would still be able to weather the storm.

To try to make sure this is the case, I’ve been putting off debt payments until late in the month when I know, for sure, exactly what hubs’ income is for the month, how much money we’ve got for the next month (from our now modified living on last month’s income fund), etc.

It certainly feels risky at times, but my hope is that this is only for three months. By the time the new year rolls around I hope and pray that we’ll be consumer debt-free (meaning, the car has been paid off). If that’s the case, then we may take January “off” of debt-payments (aside from minimum obligations) so we can re-stock some of these savings that really should be funded at a higher level.

That’s the plan anyway. We’ll see what curves life throws our way.

Have you ever lived with a super-low financial safety net for a period of time in order to try to meet some financial goals? If so, did it work for you?

We’ve done this once before. Back when we paid off our Wells Fargo credit card (in May 2014), I made a a giant payment (like $3500) to pay off the card in full before I even knew if we had the money available. To clarify, that’s when we had a 100% variable income (no steady pay), so we literally had the money in a checking account but I didn’t know if we’d have enough money coming in to cover the rest of our bills for the month! I made a giant leap and just paid the bill in full and crossed my fingers that it would all work out. Thankfully, it did. We earned enough to cover the rest of our bills and all was fine. I’m hoping for a repeat situation now. I want this car loan debt gone NOW!


Celebrating Mini-Milestones

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Friends – I have a fun mini-milestone to share today….

Remember my debt thermometers?

IMG_1440

Please ignore grease stain on bottom left…the thermometer hangs by the stovetop so it occasionally gets grease splatters. Gross, I know. But the dang thing has sentimental value so I refuse to simply make a new one. 

Well, they’ve continued to hang on my fridge side-by-side: the fully filled-in Wells Fargo debt thermometer, and my still mostly empty Auto Loan debt thermometer.

I love having them side-by-side because I can remember feeling like my Wells Fargo debt was going to take forever to pay off, and its so nice to look back and remember what it felt like to kick that debt’s butt!

For a number of reasons, my auto loan debt hasn’t been going away nearly as quickly. Part of this is income-based (our income last summer was rockin’ and this summer it hasn’t really peaked like it did last year). But the other big reason is because I took my attention away from the car for a few months. I was really focused on knocking out a couple of smaller debts so I could feel some of that psychological boost that I was so desperately craving. So I put the car on hold for a few months until I could knock out the license fees and one of our medical bills. As a result our auto loan debt has been hanging steady just under $16,000 for months now (literally. See debt updates from January, February, March, and April – all of which my car loan debt was between 15,000-16,000. That’s a LONG time to be stuck in that holding pattern!)

ANYWHO…

Now that I’ve officially eliminated those two pesky debts, I’ve turned my attention back to the car loan. And let it be known that May 2015 is the month that I’ve officially busted down below the $15,000-mark!

I still have a long way to go. I haven’t even reached the half-way mark (though its just around the corner!), but getting below $15,000 owed felt significant of its own right, so I wanted to share this mini-milestone with you all!

Some of my favorite comments are from casual readers who happened across the blog one way or another and used it as motivation to get rid of their own debts! One comment, in particular, resonated with me. The commenter said she had seen one of my posts (several months ago) where I announced I was going to tackle my car loan. Obviously I ended up putting it on the back-burner for several months, but this reader did not. She used it as inspiration to kick her car loan’s butt and now owns her car outright – no payments owed to anyone!

I know that feeling (prior to this car, I had outright owned my two previous vehicles). It feels GOOD. And I want it back. I’m coming for my car title, PenFed. You guys better get it ready to mail because it will be MINE before you know it!

MWHAHAHAHAHAHA (<my evil debt-paying laugh) ; )

What mini-milestones have you celebrated recently?